In this piece, we will take a look at the Top 10 High-Flying AI Stocks This Week.
The US equity market is the most expensive it has ever been. After two years of blockbuster gains, most counters appear to be trading at all-time highs, leaving value investors with no option but to stay in cash. The eye-watering valuations have come against the backdrop of an artificial intelligence-driven rally.
The big question now is whether the AI-driven rally has come to an end, going by recent pullbacks across various counters. According to Morgan Stanley’s head of research, Katy Hubert, the AI-driven bull market is just getting started. Hubert is bullish in part because of where she thinks we are in the AI adoption and capital expenditure cycle.
“If we’re talking about ultimately a $10 trillion AI infrastructure investment, we’re at single-digit penetration today,” she said.
In terms of user adoption and business investment to expand the products, each technological development wave spanning decades is about ten times larger than the one before it. Given that about $10 trillion will need to be poured to accelerate developments around AI, the analyst expects the equity market to continue edging higher.
The fact that earnings revisions for the leading tech companies in the market still have a lot of upside potential when compared to the trajectory they took during the mobile internet cycle beginning in 2010 is another indication that we are still in the early stages of the AI cycle.
Building out infrastructure and training models to tackle tomorrow’s complex problems constituted the first wave of AI growth. With the continued infrastructure expansion, there is cause for optimism that AI will have another fantastic year.
According to Jensen Huang, upgrading the world’s $1 trillion worth of computers is necessary for accelerated computing, and it will take time. Furthermore, 2025 might be the year of agentic AI, or AI agents with the ability to reason, create solutions, and implement them. Businesses and industries may undergo radical change as a result of this and other practical applications.
As companies turn AI prototypes into products this year, cloud computing companies stand to gain from investments made in AI infrastructure over the past two years. However, it is not the only industry reaping the benefits of the AI revolution.
The fintech industry is expanding significantly due to technological advancements, artificial intelligence, and data analytics, especially in the banking, underwriting, legal, lending, risk, and treasury sectors. AI-powered banking solutions improve customer satisfaction, streamline processes, and facilitate in-the-moment decision-making. In return, they are giving rise to unique investment opportunities in the banking sector.
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Our Methodology
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Top 10 High Flying AI Stocks This Week
10. UiPath Inc. (NYSE:PATH)
Number of Hedge Fund Holders: 34
UiPath Inc. (NYSE:PATH) provides an end-to-end automation platform embedded with artificial intelligence and machine learning capabilities to improve decision-making and information processing. On January 10 analysts at Barclays maintained a Hold rating on the stock with a $15 price target. The hold ratings comes amid growing expectation that the company is well positioned to benefit from rising demand for automation and advancement in AI and machine learning.
The company has already unveiled a new suite of generative AI features, such as Context Grounding and specialized LLMs like DocPATH and CommPATH to improve automated AI models for particular business requirements. Additionally, it has moved to combine its expertise in robotic process automation with generative AI.
UiPath Inc. (NYSE:PATH) has also unveiled the Agent Builder tool, allowing developers to design, build, evaluate, and publish AI-powered agents collaborating with traditional process automation tools. The company is promoting the idea of “agentic automation,” which emphasizes AI agents that are more advanced than conventional chatbots like ChatGPT.
9. Palo Alto Networks (NASDAQ:PANW)
Number of Hedge Fund Holders: 64
Palo Alto Networks (NASDAQ:PANW) is a technology company that provides cybersecurity solutions. It also provides cloud security solutions, including Prisma Cloud, a cloud-native application protection platform. On January 16, research firm KeyBanc Capital Markets reiterated an Overweight rating on the stock with a $435 price target.
The upgrade was in response to Palo Alto Networks (NASDAQ:PANW) inking a deal with the UK’s Emergency Services Network. The deal is worth $1.65 billion and, for seven years, is also in partnership with IBM. It is for the provision of security services such as network and cloud asset protection through Prisma Cloud.
Palo Alto Networks (NASDAQ:PANW) has also partnered with air transport technology specialist SITA. Under the terms of the deal, Palo Alto Network’s artificial intelligence-powered cybersecurity platform will be integrated into SITA’s cybersecurity portfolio. The deal paves the way for the cybersecurity company to expand its footprint and transform cybersecurity in the air transport industry.
